That banks cannot return their depositors' money wholesale really really annoys me.
Plants are aliens, and fungi are nanomachines.
Lost in Space
Capital controls always accompany a bank run, otherwise the banks will run out of liquid funds and precipitate a major collapse. Leave your euros where they are, people. They're far safer. If Greece stays on the euro, the ECB will make good on them, and if it doesn't, the government will trade your euros for whatever the new currency is. Keep emergency cash on hand, of course, but otherwise stay calm. Panics of this sort are by nature self-fulfilling.
edited 29th Jun '15 9:53:21 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
My idea of how banks work is likely too simplistic, but I've long presumed it basically runs similar to how stores operate.
Stores use "capital" to buy merchandise to sell. "Capital" is usually the owners' money, unless they took out a loan.
Banks use other people's money to make money. Their capital is other people's money. Which is why presumably things fall apart when most of their depositors want to withdraw their money.
Atm, I think banks should have their own capital before they can start being banks. Instead of taking out a loan (other people's money) to become a bank.
Or at least, they should have enough (of actually their own capital) to still be able to run as a bank without other people's money. The way banks use the government as a shield (when people just want their money bank) makes me think that they're constantly overextended (with other people's money).
Plants are aliens, and fungi are nanomachines.
"The only thing we have to fear is fear itself." -FDR.
![[up]](https://static.tvtropes.org/pmwiki/pub/smiles/arrow_up.png "[up]"){kind=icon}
Not really possible. A bank is always highly leveraged - that's part of how they create money in the first place, by loaning out around five times the amount of money that their depositors put in. Also, under your theory, where would people store their money to use for checking and direct deposit?
Consumer banking is a valuable service. What we need to do is segregate consumer banking and investment banking, which used to be solidly firewalled apart and now are not.
edited 29th Jun '15 11:05:20 PM by Ramidel
So they're like a store with very big debt...
My head hurts. Plus, I just found out about Puerto Rico's debt. Jesus Christ.
Plants are aliens, and fungi are nanomachines.
Imperial knight
Can we trade Greece for Puerto Rico?
Lazy and pathetic.
Party Crasher
Considering Greece, as a whole, is not up for sale yet, unlikely. You can never know with e-bay, though.
edited 30th Jun '15 4:16:06 AM by LogoP
It is sometimes an appropriate response to reality to go insane.
Well, if the Euro implodes, Europe will get more tourists. Besides, it seems to be a trend these days to want to devalue currencies, to attract them tourists. Japan's actually now tourist-friendly.
Plants are aliens, and fungi are nanomachines.
Lost in Space
It depends on how steep the fall is. If it devolves into civil disorder, then tourists will stay away. Remember the Greek riots over austerity?
edited 1st Jul '15 9:44:57 AM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Party Crasher
That's just Athensnote . The islands, which are more or less the main tourist attraction here, always remain untouched.
It is sometimes an appropriate response to reality to go insane.
Fuck you, Fascist sympathizers
What's the political makeup of the islanders? Are they more conservative?
Party Crasher
The islands are far too many to answer that question precisely. Crete and the southeast have been traditionally centre-left (PASOK, later Syriza). The Ionia, too, to a lesser extent.
Everything else is much more malleable, with big islands such as Lesbosnote "changing hands" almost every election.
It is sometimes an appropriate response to reality to go insane.
If the Euro implodes, it's not just Greece which will become cheaper.
And uh... I guess I wouldn't mind, because we had our currency devalued by more than half in recent economic times.
I'll probably never see 1 USD to 25 PHP again, so I wouldn't mind 1 Euro to 30+ PHP.
Plants are aliens, and fungi are nanomachines.
In all honesty, if I had the money I would like to go to Greece, book a hotel room overlooking the plaza they always show on T.V, just to watch the riots live.
I know it's an incredibly selfish thing to think about... but I guess its like the people who chase tornadoes. (and if something bad happened to me then I would be responsible*)
I wouldn't be surprised if there where some "wonder what economic collapse feels like" tourism going on right now. Also "I wonder how much we can abuse having paper currency" tourism and the like.
V
Greece in chaos: will Syriza’s last desperate gamble pay off?
A very interesting article. Some highlights:
By calling a referendum, Syriza has gambled that it can strengthen its hand in negotiations with its lenders. But with no extension to its bailout programme, and emergency funds from the European Central Bank (ECB) on a knife-edge, the move has prompted this week’s “bank holiday” and the rationing of cash at AT Ms.
With the opposition and business groups warning of economic catastrophe, Syriza – which means “coalition of the radical left” – faces a nailbiting week. What is at stake is whether this party of around 20,000 members can hold the left half of Greek society together long enough to force the lenders to negotiate – or whether it will crash and burn under the pressure of popular anger and disillusion. If they win, on the other hand, they will be seen as heroes by opponents of austerity across Europe.
But win or lose, Syriza in office has been a work in progress, impossible to read for people ignorant of Greece, let alone people who don’t know there are subcategories to moderate Marxism.
I’ve seen, in the bohemian Exarchia district, a troupe of black-clad 15-year-olds distrupt a whole street full of similarly bohemian cafe-goers on a Saturday night, using petrol bombs and flaming rubbish bins, simply because “creating mayhem” is their doctrine.
Athens has become, in short, the stage for flamboyant acts of self-dramatisation: sporadic riots, public kissing, street theatre and ill-advised scooter techniques. It is, to use a phrase Huxley once used about Shanghai, “life with the lid off”, and for the same reasons: “so much life, so carefully canalised, so rapidly and strongly flowing”.
Antonis Vradis, a geographer at Durham University who has studied the impact of repeated waves of unrest here since 2008, describes how the youth networks have been preparing for this week’s “rupture” with the ECB: “They are creating structures you can’t default on. Self-organised clinics, the social centres you see all around you. Structures that will help them survive.”
I meet Vradis in Floral cafe on the corner of Exarchia Square. He points out that the building – shabby as it is now – is a Bauhaus masterpiece. More importantly, during the 1944 uprising against the British, “the communists were snipers on the roof”.
The young here live always with a portion of their brain operating in the past. They don’t need wall plaques. When they move through Exarchia, or Syntagma, or up the side of parliament towards the mansion prime minister Alexis Tsipras now occupies, they can “see” where the resistance fighters died; where the students of 1974 stopped a tank.
Nobody knows what 50,000 drachmas will be worth if Greece defaults on its debts, but Kiritsis and his colleagues have for months been exposed to the basic dilemma of Syriza. It is a coalition – including the hard, pro-Moscow left who want that drachma note to become real; a centre around Tsipras who wanted to try to shrug off austerity within the euro; and former social democrats who want, at all costs, to do a deal with the lenders.
It was not until 4 June that Tsipras became convinced that his original strategy – to go on paying the lenders while negotiating the fine detail of an accord that never seemed to come – was fruitless. It was at this point that the forces in Syriza realigned leftwards and the strategy of the troika (the ECB, IMF and European Commission) – which had always been to split Syriza, forcing Tsipras and his own moderates into a coalition government with the centre parties – was in tatters.
The ultimate question for Syriza, with the banks closed and the referendum due, is: can it now function as a movement? It has ridden to power on the back of social movements but, unlike Podemos in Spain or Sinn Féin in Ireland, has never really been a mass movement itself.
Lost in Space
Steinbaum: The Rigid DNA of the European Central Bank
In summary, the ECB was instituted with a single mandate: to curb inflation, and without any accountability to the nations that it supervises, on the basis of a theory formed in the 1970s when the neoclassical paradigm first came into its heyday. It's a failure now, with Greece, and will continue to fail again and again until it dies.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Can the Grexit Lemon Be Made into Lemonade?
(Basically Greece has to avoid using the central bank to recklessly print money.)
Lost in Space
Eh, Greece is going to be printing money left and right to maintain liquidity in a world in which the euro is no longer its currency of issue. I don't think that the federal balance is really relevant in such cases, and sovereign nations don't need to maintain balanced budgets; attempting to do so in a demand shortfall is a recipe for perpetual depression.
Otherwise, the article seems wise. The problem, as noted, is that Syriza may not have the technical capability to manage everything properly.
edited 2nd Jul '15 2:23:21 PM by Fighteer
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
This all just makes me prefer even more that paper money has gold backing it.
Plants are aliens, and fungi are nanomachines.
Lost in Space
It's a fool's dream. Gold is like a euro that the whole world is forced to use and that has no central bank guaranteeing its value or relieving debts. The idea of going back on it or using it as a reserve currency is only good in the fevered dreams of people who have no real concept of how money works.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Syriza government likely to fall if Greece votes Yes
Essentially, the referendum is now a confidence vote in Tsipras and Varoufakis. The government is falling apart because the Independent Greeks and a lot of juniors in Syriza are balking at the prospect of refusing a deal. That said, Tsipras has got to be lying through his teeth when he says that if Greece votes No, they can get a better deal.
Honestly, the guy should put it to the voters: "Europe will not back down. Do we agree to their demands or do we walk away from the table?"
Well they have no choice.
Greek government: "So you are offering us more austerity without restructuring? Yea, we rather self destruction than slow agonizing death".
Party Crasher
First polls are officially out.
It is sometimes an appropriate response to reality to go insane.
It happens anywhere there's a severe and prolonged downturn. They'll come back once things start looking up.
"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"